Brokers report tougher criteria choking market

Up to two-thirds of mortgage brokers have been unable to find a home loan for clients in the past two months, as the credit crunch continues to restrict the market.

According to the Intermediary Mortgage Lenders Association survey, carried out before the market worsened markedly this week, the problem is most acute in the south-east where some 70% of brokers were unable to find a new loan or remortgage deal for one or more clients: half the brokers questioned cited the tightening of lending criteria and increase in deposits required as the main reasons. The survey, out yesterday, found 14% of those borrowers turned down now face repossession.

Peter Williams, IMLA executive director, said: "Our survey shows how the lack of product availability is affecting all parts of the market and how essential it is for the Bank of England and government to ease the liquidity crisis. The announcement of the extension of the special liquidity scheme by the Bank was good news, but we need to see measures that will help ease the log-jam for brokers and customers." This month, Bank governor Mervyn King had said the special liquidity scheme would end as planned on October 21, but then agreed to extend it to January 30.

Most brokers reported problems across the market, not only in the sub-prime sector. More than half said they had failed to find loans for first-time buyers.

Even in the case of standard borrowers - homeowners thought to have been least affected by the loans squeeze - 26% of intermediaries said they had not been able to secure a new deal.